On Wednesday, the US House Committee on Financial Services held a hearing with the Chair of the Federal Reserve, Jerome Powell. During this semi-annual monetary policy report, Mr. Powell said that a wholesale central bank digital currency (CBDC) might bypass Congress and be issued without approval. The Chair also noted that a CBDC is still years away.
Asked whether issuing a CBDC would have to be authorized by Congress, Mr. Powell stated, “that would absolutely be the case as it relates to a retail CBDC”. Congressman Hill, who pressed the Chair on this issue, joins the list of Republican representatives who have quizzed the Fed about whether or not the issuance of a digital dollar would require legislation. Whereas in the past, officials had noted that the Fed had no intention of issuing a CBDC without explicit support from the executive branch and Congress, this is the first time the central bank clarified that this might not be needed for a wholesale option.
The reason is that, unlike the retail option, a wholesale CBDC would not be directed to consumers. Consumers do not have accounts at the central bank, so the Fed has no direct relations with them for electronic money. Instead, Mr. Powell referred to the wholesale market and a digital dollar “that would look an awful lot like a bank reserve”. This would simply be a different kind, the Fed Chair explained.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
